Profits rose to $720 million in the first quarter, or 75 cents a share, while adjusted earnings per share rose 22% to 82 cents. Analysts had expected an an average of 75 cents per share.

Revenues dropped to $6.94 billion, down from $6.98 billion last year.

On the network side, revenue growth of 3% to $3.7 billion drove operating income up 7% to $1.3 billion.

Film and television revenue dropped 4% to $2.7 billion, although adjusted operating income grew 23% to $265 million, driven by contributions from “The Hobbit: An Unexpected Journey” and lower P&A costs.

Time Warner CEO Jeff Bewkes pointed to “somewhat disappointing” theatrical results from “Gangster Squad” and “Jack the Giant Slayer,” both of which underperformed at the box office. But the studio is looking forward to upcoming pics “The Great Gatsby,” “Man of Steel,” “Pacific Rim,” the second film in the “Hobbit” trilogy and the third installment of the “Hangover” franchise.

Ad revenue growth at Turner and HBO was more than offset by declines at Time Warner’s news networks, which the company blamed on “lower demand,” and the shutdown of Indian network Imagine and TNT television operations in Turkey in the first half of 2012.

As always, the performance of CNN was a topic of discussion for the Time Warner topper. The all-news network took a hit last month with inaccuracies in its frenzied reporting on the Boston Marathon bombing investigation. Bewkes noted that the cabler, now led by Jeff Zucker, is addressing key programming needs.

“We do need to be more competitive in the mornings, we’re working on that,” Bewkes said of CNN.
“The issue is: how long do (viewers) tune in? we’re making strides in the length of time that people watch CNN as we basically deepen the programming.”

Bewkes pointed to the hirings of Chris Cuomo, Jake Tapper and Rachel Nichols to illustrate the initiative CNN was taking to address some of the network’s issues.

Bewkes also emphasized the strength of Warner Bros. sitcoms like “Two and a Half Men,” ratings increases for TNT shows like “Dallas” and “Boston’s Finest” and the success of Adult Swim, which Bewkes called a “juggernaut.”

The exec opened up Wednesday’s call by acknowledging last month’s announcement that Time Warner would spin off magazine unit Time Inc. by the end of the year.

“After the spin, it will have much more strategic and operational flexibility and it will be able to develop a shareholder base that’s aligned with its strategic growth prospects.”

Bewkes compared the spinoff to Time Warner’s separation from AOL for years ago, and said that both companies were in stronger positions today because of it.

Publishing revenues declined 5% to $737 million in the quarter, mainly due to an 11% decline in subscription revenue and 10% declines in other revenue. Advertising revenues rose 2%.

Time Warner generated more than $900 million in free cash flow in the quarter, which helped Time Warner return capital to shareholders. company purchased about $670 million of common stock and paid $273 million in dividends.